LiveCorp boss tips challenges ahead as supply tightens

LiveCorp boss tips challenges ahead as supply tightens

Beef
Sam Brown is the chief executive officer of Livecorp.

Sam Brown is the chief executive officer of Livecorp.

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LiveCorp chief executive officer Sam Brown says supply will be a significant challenge for the live export market.

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Opinion 

The livestock export market has always been a risk management tool for producers - if not the only marketing option in some cases, particularly the northern cattle industry.

That shows no sign of abating, with strong international demand generally for live cattle, and a low dollar helping to make Australian cattle more competitive.

The challenge going forward is more likely to be the supply of cattle, especially if seasonal conditions return to normal.

The industry would not be possible without producers, who capture around half of the revenue generated by livestock exports - around $630 million a year.

For producers in northernmost Western Australia, around 70 per cent of total cattle sales are destined for live export, while in parts of the Northern Territory it is over 90pc.

Even producers not supplying into the live trade benefit, with the competition keeping prices strong.

A loss of those markets would see a flood of cattle into processing plants further south, dropping prices. Interruptions to the trade in the past have been felt as far afield as the Victorian dairy sector.

Strong relationships and open lines of communication will remain key as we look to the future, as exporters continue to upskill and introduce evolving technology, and in turn look at performance factors that are underpinning or driving improved performance across the supply chain - all the way to in-market customers.

There is a growing trend for producers to forge strong alliances with agents and exporters.

The two-way communication provides insights on market trends and risks, as well as ways to optimise preparation, and meets the growing appetite on both sides for performance feedback.

Growing industry 

For those with stock to sell, the current growth markets are Indonesia, Vietnam and Israel, which have taken increased numbers of feeder cattle.

Across the board, feeder exports have increased 25pc so far in 2019 compared to the previous year, with a strong supply of lighter cattle available to meet demand.

Nationally, around 484,000 cattle were exported from January to May, up from 403,000 for the same period in 2018.

This was reflected by activity at northern ports, and while Darwin shipped 10,000 fewer cattle, Townsville was up 30,000 head, Broome up 23,000 head and Port Alma shipped 25,000 head in those five months.

Numbers for the full year are projected to be lower than last year, however, due to the constraints of a smaller national herd.

While retail sales are gaining ground in our destination markets, we cannot overlook opportunities within the traditional wet markets, and the industry is working with feedlots, abattoirs and meat distributors so all participants in the supply chain can add and capture value from Australian cattle.

Market opportunities are constantly changing, and exporters have to understand and navigate global factors as diverse as changing government policies and the potential for increased demand due to African swine fever reaching Asia.

Related reading:

Value analysis of the Australian live cattle trade, Mecardo, 2018

However, the big unknown is the weather.

Supply has already tightened following pasture growth in areas hit by flooding at the beginning of the year, and even an average wet season will see producers retaining heifers.

Cattle losses in northern Queensland due to the floods have been put at 600,000 by ABARES recently, which not only impacts numbers available now but the lost opportunity of their progeny.

Combined with destocking across northern Australia due to the dry conditions, the national herd has dropped to levels not seen in decades.

The fortunes of northern producers and exporters are tied.

Partnerships and a shared commitment to animal health and welfare, business success, regional performance will ensure the future of both sides. T

he live cattle trade will continue to support northern Australia, providing both direct and indirect jobs, and underpinning land values.

In return, producers can support exporters to increase demand by supplying quality livestock that create value in-market.

- Sam Brown is the chief executive officer of LiveCorp

The story LiveCorp boss tips challenges ahead as supply tightens first appeared on Farm Online.

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